On 14 December, the Swiss Federal Council published its report “Legal basis for distributed ledger technology and blockchain in Switzerland”. The report deals with the future regulation of Bitcoin and the underlying technology.
As previously announced, the Swiss government does not intend to enact an additional blockchain law. The technology, which lies under crypto currencies such as Bitcoin and Ethereum, holds great potential for the financial sector, as the Federal Council acknowledges in its report. That is what the report says:
“Distributed Ledger Technology (DLT) and blockchain technologies are among the remarkable and potentially promising developments in digitization. These developments in the financial sector as well as in other sectors of the economy are predicted to have considerable, albeit not yet conclusive, potential for innovation and increased efficiency. Today, Switzerland is one of the leading locations in the DLT and blockchain sectors. In the financial sector in particular, a growing FinTech and Blockchain ecosystem has developed in Switzerland in recent years”.
In order to create the best conditions for this, the company does not want to enact its own Blockchain law. However, the government is planning to react flexibly to technical innovations if necessary. In addition, the Federal Council of Switzerland considers some adjustments to be sensible. To this end, the following areas of financial market law are to be adapted by the beginning of next year:
- Banking law
- Financial market infrastructure law (new authorisation category for infrastructure providers in the blockchain/DLT area)
- Collective Investment Schemes Act: Consultation draft for the amendment of the Collective Investment Schemes Act in order to accelerate the approval of new products.
Bitcoin money laundering: Swiss Federal Council cannot accurately determine real risk
In the future, more attention will also be paid to money laundering and the financing of terrorism. However, the Federal Council of Switzerland recognises that it is not possible to accurately assess the actual need for trade here:
“The risk analysis prepared by the Interdepartmental Coordination Group on Combating Money Laundering and Terrorist Financing (CFT) in 2018 shows that there is a risk of misuse of crypto-based assets for money laundering and terrorist financing due to the identified threat and vulnerability in Switzerland. However, the risk and vulnerability identified affects all countries. The risk analysis also shows, however, that in Switzerland the real risk cannot be determined exactly due to the small number of cases.”